I'm trying to make an intelligent case that the millions of dollars a
family might make selling the farm or a business is not enough to
retire on - that people don't realize just how long they may live --
that the  windfall is short-lived -- that the average person won't
know how to invest a sudden infusion of even $10 million. Add to that,
sharing much of the proceeds with kids and extended family who partner
in the business as well. Is there a short essay on this subject: It's
not as much as you think?

You might be interested in playing with some numbers on this annuity calculator:
http://www.moneychimp.com/calculator/annuity_calculator.htm

Enter your $ 10,000,000 as the principal, a conservative interest rate, say, 3%;
as many years as you think the person will live off the principal and
then hit calculate.  You may be surprised how large the annual payment
will be.

Of course, taxes and inflation need to be considered.

I think you have two separate questions here:

1) Could a reasonable person retire with a $10 million "nest egg"

2) Will your average person make good decisions when presented with a
large sum of money.

Even $1 million, put in a conservative investment (money market or CD)
should be able to get 3% interest, which gives an income of
$30,000/year without touching the principle.  That won't fund a lavish
lifestyle, but it's more than a lot of people are making from their
jobs.

Yes, 10 mil is a fortune. But how will that money play out if you have
to start with nothing: no house, no income -- you keep your savings
and your personal things, but the 10 mil (after sharing it with other
family members) must last 30 years.

You haven't specified how many people the money would be shared with. 
This makes a big difference.  Taxes on the sale could be large or
small depending on circumstances.  This also needs to be considered.

I suppose I'm not being clear. Whether it's 10 mil or 3 mil is not
important. Yes there are any number of circumstances. However, when
you factor in what will happen to that money once the sale is complete
-- taxes, buying a new house to live in, etc -- the money (whatever it
is ain't that much). I'm looking to make that point. This is an
economics theory question and I'm looking for help articulating and
writing out the answer with some data to support the answer. Thanks.

The fact is that its hard to make a case for you when you probably
wrong.  Living off the interest of a large sum of money is quite
possible to do; I know someone who has done it.  He bought an
expensive bought and has spent is life sailing around the world. 
Aside from such anecdotal evidence, the back of the envelope
calculations bear it out.  A very conservative 5% per year interest on
even $3,000,000 is 150K per year.  Figure about $100K net taxes.  If
you only spend say $80K a year, which is still a ton of money in most
parts of the country, you can reinvest the difference, and thus have
even more cash flow per year.  If you are a bit more aggresive with
your investing,  you can get about  %10 per year on average in an s&p
500 fund.  if you are extremely aggresive, you might be able to get
%20 per year in a hedge fund (though you risk going bust). And
remember this is assuming you are spending your cash flow only. We are
even't talking about dipping into that fatty 3 mill principle you've
got, which you can do in you need to.

bought = boat.

All very interesting which I guess means your not the guy for this
particular project. Thanks

Try looking at past lottery winners who have gone broke.  I think this
may be what you are hinting at.  People who fall into boatloads of
money, and without taking the proper steps, just spend it all.

Here is one such story:
http://www.bankrate.com/brm/news/advice/20041108a1.asp

google search tips:
lottery winners + bankruptcy

Thank you again -- but I'm looking for someone else to look it up and
write it. I'm looking for the essay as much as the answer.

I'm with Frank on this one... if you can't retire on $3Million then
you have problems that money won't fix.

The only real thing you have going for your point is inflation... at
3% yearly inflation (more than I expect to see over any 10 year
period), prices will double every 24 years.  If you live 48 years past
retirement (very early retirement to live that much past it) then
thing will cost 4 times what they cost when you retired.
So let's say you're living off this $150K per year interest at age 45.
 At age 93, that $150K will only buy $40K worth of stuff.  I'm not
much for writing an essay for you that I could poke holes through and
demolish on lack of good thought, but that is the best basis for your
arguement you're going to find.

One other thing about this,  you might be right that the average
person might not have the investment smarts to do this on their own,
but they only need to be smart enough to hire an accountant and/or
financial advisor.

You may very well make it on a million bucks and here's why:

1. No house payment. A big chunk of cash goes here each month.
2. No car payments.
3. By now, you should own EVERYTHING in your house when you retire.
4. Credit cards SHOULD be paid off by now. 
5. Vacation perhaps only 2 or 3 times a year with a big vaction maybe
every 3-5 years.
6. Enroll in madicaid/medicare with a rider for anything over the amount.
7. You should also have a small sum from a company retiremnt account
adding to your income.
8. It won't make you rich but social security will add to the mix.
9. Save a bunch by living within a days drive of family.
10. Check for any and all senior discounts. Insurance, meals and travel.
11. Lower income also means lower taxes.
12. Oh, and just kidding of course, die before you're 80 years old.
This leaves living only 15 years from age 65.

Do these things and you just might make it!

***************************************
Lotto winners? Most go BK because they had NO CLUE about money before
they ever bought a ticket. They were not used to the lasting
possiblities of money on the the sort term rush of a huge amount of
cash the never had to work for being dropped in their collective laps.

Errrrr . . .
 . . . "only the sort term rush" . . .